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1 Ohio Department of Job and Family Services To Strengthen Ohio s Families through the Delivery of Integrated Solutions to Temporary Challenges Health Care Employment in Ohio: Components of a Growth Sector 2009 Report

3 Preface In 2008, the Ohio Department of Job and Family Services (ODJFS), Bureau of Labor Market Information published a report entitled Ohio Health Care Employment: Labor Market Trends and Challenges. The report remarked on several unique economic features of health care industries, such as its resiliency to macroeconomic cycles, historic growth, high training needs of certain key occupations, potential to grow further in light of an aging population, and a slight tendency to draw business from outside the state. Overall, health care has been an important part of Ohio s economy. This report represents an update of statistics and analysis from that publication. Section I contains a brief review of how total employment health care industries has changed in the last 30 years and how they are reacting to the current economic recession. Section II takes a closer look at the industries that comprise health care, including employment growth, number of establishments, average weekly wages, staffing patterns, and their relative importance in Ohio vis-à-vis the United States. Section III examines the occupations that feed into health care industries and projections for employment through Section IV addresses the education and training needs for key health care occupations, gauges the education system s ability to meet projected need for trained workers, and discusses a potential shortage of registered nurses. Finally, section V compares health care labor markets for eight Metropolitan Statistical Areas around Ohio. The technical notes and references sections at the end of this publication contain important information about the sources of information used and their relative strengths and limitations. Health care industries account for nearly one out of every eight jobs in Ohio today. Workforce development professionals across the state will need to take a close look at health care industries and occupations in order to fully understand this crucial part of the state economy. Keith Ewald, Ph.D., Bureau of Labor Market Information Office of Workforce Development Ohio Department of Job and Family Services 2

4 Executive Summary Health care, comprised of ambulatory health care, hospitals, and nursing and residential care, accounts for approximately one out of every eight payroll jobs in Ohio. It is expected to be one of the fastest-growing sectors of the economy over the next ten years. Health care industries employed 662,780 workers in 2007, about 12.5 percent of total payroll employment or one employee for every 17 people. Since 1976, health care employment has grown at a 2.8 percent annual compound rate, with almost no reaction to economic recessions. Health care employment has historically been resilient to economic downturns due to inelastic demand, reduced opportunity cost of time for treatment, consumption pattern changes, and increased labor availability. The current economic recession, however, has had an effect, due to lost health insurance and disrupted capital markets. Employment growth has been flat in the first four months of Ambulatory health care employs 230,321 workers in Ohio and has grown 20.6 percent since It is expected to grow 26.8 percent between 2006 and The most prevalent occupations in this subsector are medical secretaries, registered nurses, and home health aides. Hospitals in Ohio employ 259,563 workers. Average wages have climbed 32.8 percent since 2000 to $855 per week. The industry has been consolidating into a smaller number of high-employment establishments. Hospital employment is expected to grow 13.4 percent from 2006 to The most prevalent occupations are registered nurses; nursing aides, orderlies, and attendants; and licensed practical and licensed vocational nurses. Nursing and residential care employs 172,896 workers and has added 623 new establishments since 2000 (22.5%). Employment is expected to grow 13.4 percent from 2006 to The most prevalent occupations are nursing aides, orderlies, and attendants; licensed practical and licensed vocational nurses; and home health aides. Employment in nursing and residential care is much more concentrated in Ohio than nationally. Health care occupations accounted for 575,640 workers in Ohio in Employment in these occupations is expected to grow 20.4 percent by We project a combined 21,217 health care job openings during this period. There will be health care job openings at every level of education and training. The greatest employment growth and the largest number of openings will be in occupations requiring associate degrees or short-term on-the-job training. We have identified twelve key health care occupations based on high employment; education and training requirements; and importance in health care industries. Average wages range from $29.45 to $11.20 per hour. 3

5 Three-fourths of all the health care jobs in Ohio by 2016 will require some sort of postsecondary education. These requirements may be met through postsecondary education or apprenticeship. There are 177 postsecondary institutions offering 474 training programs linked to key health care programs. There is a possible shortage of trained registered nurses in the U.S. one that could potentially become worse due to rising wages and a lack of teachers. 4

6 I. Health Care Employment Health care employment may refer to a set of either industries or occupations. Industries include three NAICS subsectors: ambulatory health care (NAICS 621), hospitals (NAICS 622), and nursing and residential care (NAICS 623). 1 Although all three may be considered health care, each has different staffing profiles. Combined Ohio employment for these three subsectors was 662,780 in 2007, or about 12.5 percent of total payroll employment. Historical Trends Figure 1 below compares the growth in these three subsectors with growth across all industries. Employment levels were indexed to (scaled to employment in) The figure also shows economic recessions during this span. Between 1976 and 2007, total health care employment grew at a steady compound rate of 2.8 percent per year and showed almost no reaction to recessions in 1980, , 1990, and By comparison, total employment only grew 1.1 percent per year on average and dropped significantly during these downturns. 300 Figure 1: Health Care and Total Employment Growth in Ohio, Health Care Total 250 Employment Index (1976=100) Shaded areas represent economic recessions, peak to trough. Source: QCEW; Bureau of Economic Research For more information on how industries are classified and defined, see the Technical Notes at the end of this document. 5

7 One might also compare the growth in Ohio s health care employment with that of the population. In 1976, Ohio s population was about 10,753,000, with health care employment of 277,500 one employee in the health care industry for every 39 people. By 1986 there was one employee for every 27 people. In 1996, one for every 22 people. Most recently, in 2007, Ohio s population was 11,477,641 and the health care industries had one employee for every 17 people. Employment in health care industries has grown more than twice as fast as the population. Reactions to the Economic Downturn There are many reasons to expect this growth will continue. Advances in medical technology and the aging of the population, whose health care needs are usually greater than the general population, 2 should generate continued expansion. Expectations of public policy expanding health care coverage would further increase expenditures and utilization. In addition, since most of the health care industry cannot be outsourced, the growth would have to be local. Can this growth withstand an economic recession? Hospital workload and employment has been shown to increase during recessions. 3 One possible reason is that, for labor market participants, the opportunity cost of time for treatment drops, making people more likely to go to see a doctor. 4 There may also be consumption pattern changes during a recession. With reduced access to medical insurance coverage, workers in a recession may opt instead to only go to the emergency room when necessary, instead of pursuing regular preventative care within ambulatory health care services. 5 Another reason for increasing employment during recessions may be simple labor availability. Nationwide, there is a large number of job vacancies in health care, especially in hospitals and certain high-training occupations, such as nursing (see section IV). When workers in other industries lose their jobs, they become available for hire (with appropriate training) in health care establishments. Research has found a strong inverse relationship between employment changes in health care and in total nonfarm employment. 6 This is not to suggest that the health care industry is completely immune to fluctuations in the broader economy. This particular recession especially has had strong negative effects on the health care industry not present in past downturns. First, and perhaps most obviously, laid off workers are likely to lose their health insurance, putting some medical services out of reach. Also, the current credit crunch has interrupted providers access to capital markets. Large hospitals in particular have accessed the credit markets directly in the past by issuing variable-interest bonds to pay for capital improvements, such as expansions or new equipment. 7 The interest on such bonds has risen significantly, putting financial stresses on their issuers and forcing them to cut back elsewhere. 2 Goodman, 3. 3 Ibid., Ruhm, Goodman, 8. 6 Ibid., Arnst, Health Care: Not So Recession-Proof. 6

8 Figure 2 below uses the most recent data available to examine how private hospital employment has changed in the current recession. This chart compares individual years to highlight seasonal changes. Typically, employment in hospitals increases during the first quarter of the year. In the first four months of 2009, however, employment has been nearly stagnant, with only a modest climb in may. This came after a large employment drop of about 2,100 workers from December 2008 to January Clearly, the recession is having a chilling effect on hospital employment. 235 Figure 2: Hospital Employment, 2005 to April Employment (thousands) January February March April Source: Bureau of Labor Statistics [BLS], Current Employment Statistics. May June July August September October November December 7

9 II. Industrial Makeup and Projections At both the national and state levels, health care industries are projected to create more new jobs than any other major industry group nearly three million new health care wage and salary jobs nationally and about 121,500 in Ohio between 2000 and One common mistake when speaking of the health care industry is to treat it as one large homogenous entity, when in fact there are several different segments, each with their own labor needs, growth patterns, and employment and wage prospects. As mentioned earlier, health care industries are comprised, in terms of employment, of three subsectors: ambulatory health care, hospitals, and nursing and residential care facilities. (Unless otherwise noted, all employment and wage information includes both public and private establishments.) A closer examination of the three subsectors follows. Ambulatory Health Care Ambulatory health care includes most doctors offices; outpatient care services, such as dialysis centers; offsite medical labs; home health care services; blood banks; and ambulance transportation. Figure 3 below shows how employment, average weekly wages, and number of establishments have changed over the last seven years. 9 Figure 3: Summary Profile of Ambulatory Health Care Year Number of Estab. Employees Empl. per Estab. Average Weekly Wages , , $ , , $ , , $ , , $ , , $ , , $ , , $ , , $901 Net Change, Percent Change, ,162 39, $ % 20.6% 12.9% 16.5% Source: ODJFS, "Employment and Wages Publications" [QCEW]. Ambulatory health care has had the strongest job growth of any of the three health care subsectors: 20.6 percent. The number of establishments over this period indicates relative stability in establishment size; the average workplace only has about 1.4 more employees today than it did in Average weekly wages were $901, having grown 16.5 percent 8 Figueroa and Woods, 75-85; ODJFS, 2016 Ohio Job Outlook, A1-A7. 9 See the Technical Notes at the end of this report for important information about industrial employment data. 8

11 Hospitals This subsector includes most general medical and surgical hospitals, both public and private, along with psychiatric, children s, and other specialty hospitals. Figure 5 below shows how employment, average weekly wages, and number of establishments have changed over the last seven years. Year Figure 5: Summary Profile of Hospitals Number of Estab. Employees Empl. per Estab. Average Weekly Wages , $ , $ , $ , $ , $ , $ , $ , $855 Net Change, Percent Change, , $ % 12.2% 20.6% 32.8% Source: ODJFS, "Employment and Wages Publications" [QCEW]. One notable trend in hospitals is the strong growth in average weekly wages. The average worker earned $855 per week in 2007, $211 more than in 2000 (32.8%). Employment growth has not been as strong as in the other health care industries only 12.2 percent during the period of analysis. Another interesting aspect of the hospital subsector is its patterns in establishment size. Nationally, most health services consist of smaller establishments employing less than 20 people. Nearly half of non-hospital establishments employ fewer than five workers. (See figure 6 on the next page.) Only about a third of workers are in establishments with more than one hundred people. Conversely, among hospitals, nearly 60 percent of establishments have more than one hundred workers, and 71.1 percent of hospital jobs are in establishments with more than one thousand workers. (See figure 7 on the next page.) The general profile for hospitals is one with a small number of high-employment centers. The average hospital in Ohio has employees, and this average has been growing. Employment has grown, even as the net number of establishments has declined. This indicates the industry is consolidating even further. (Ambulatory health care also shows some consolidation tendencies, though not nearly as strong.) 10

14 Nursing and Residential Care This subsector includes a wide number of long-term care facilities, such as substance abuse rehabilitation, nursing homes, residential mental health facilities, or even homes for delinquent children. (Again, these employment figures combine all private and public establishments.) Figure 9 shows how employment, average weekly wages, and number of establishments have changed over the last seven years. Figure 9: Summary Profile of Nursing and Residential Care Year Number of Estab. Employees Empl. per Estab. Average Weekly Wages , , $ , , $ , , $ , , $ , , $ , , $ , , $ , , $470 Net Change, Percent Change, , $ % 10.6% -9.7% 18.3% Source: ODJFS, "Employment and Wages Publications" [QCEW]. In the last seven years, 623 net new nursing and residential care establishments were created in Ohio net growth of about 22.5 percent in a relatively steady line. Employment, while still having grown about 10.6 percent during that time, has not kept pace with the growing number of facilities. Unlike hospitals and ambulatory care, nursing and residential care establishment sizes have been shrinking; the average establishment had 5.5 fewer employees in 2007 than in 2000 (-9.7%). Average weekly wages have grown 18.3 percent since 2000, but they are still the lowest of the three health care subsectors only $470 in For comparison, average weekly wages across all Ohio industries that year were $768 more than 60 percent higher. Between 2006 and 2016, there are expected to be 28,600 net new jobs created in nursing and residential care facilities in Ohio, an increase of 13.4 percent. 12 Figure 10 on the next page shows the twenty most prevalent occupations in this subsector. The most striking feature on this table is the large number of occupations with average wages below $10 per hour. Only six occupations shown here have average wages above the state median. Thirteen of these occupations require nothing more than on-the-job training for entry. 12 Ibid. 13

15 Figure 10: Twenty Most Prevalent Occupations in Nursing and Residential Care Code Occupational Title 2008 Avg. Hr. Wage Edu. & Train. Reqirements Nursing Aides, Orderlies, and Attendants $11.45 Postsec. Award Licensed Practical & Licensed Vocat. Nurses $19.09 Postsec. Award Home Health Aides $9.80 Short-Term OJT Registered Nurses $28.25 Associate Maids and Housekeeping Cleaners $9.35 Short-Term OJT Food Preparation Workers $9.34 Short-Term OJT Personal and Home Care Aides $9.72 Short-Term OJT Cooks, Institution and Cafeteria $12.44 Mod.-Term OJT Recreation Workers $10.99 Short-Term OJT Comb. Food Prep. & Serv. Work, inc. Fast Food $8.00 Short-Term OJT Laundry and Dry-Cleaning Workers $9.63 Mod.-Term OJT Food Servers, Nonrestaurant $9.37 Short-Term OJT Maintenance and Repair Workers, General $17.19 Mod.-Term OJT Child Care Workers $10.26 Short-Term OJT General and Operations Managers $50.42 Bach. & Exp Receptionists and Information Clerks $11.31 Short-Term OJT Medical and Health Services Managers $39.22 Bach. & Exp FL Sup/Mgrs of Food Prep. & Serving Workers $14.43 Work Exp Medical and Public Health Social Workers $21.44 Bachelors Waiters and Waitresses $8.61 Short-Term OJT Highlighted occupations have average wages above the state median $ Source: Occupational Staffing Patterns; ODJFS, "Occupational Wages and Employment;" ODJFS, 2016 Ohio Job Outlook, C1-C13. Note also that this occupational profile is the most diverse of the three health care subsectors; there are administrative, maintenance, and food service occupations shown here. Concentration of Health Care Employment Many approaches to economic and workforce development attempt to classify industries or sectors as being local or export by using location quotients (LQs). A location quotient is the ratio of the concentration of an industry in a local area to the concentration in a larger area, usually the United States as a whole. Industries or sectors with high LQs, generally accepted as 1.2 or more, are considered highly concentrated in an area and may be expected to bring new capital into the community from outside. 13 Ohio s LQs for ambulatory health care, hospitals, and nursing and residential care in 2007 were 1.0, 1.1, and 1.3, respectively. This indicates nursing and residential care has a higher employment concentration in Ohio than average. Although most hospitals are meant to provide services only to their local areas, there are several reasons they can become large regional providers. Research and medical specialty facilities may attract both patients and financial support from outside their local 13 ODJFS, Inroads,

16 areas. Ohio is home to several nationally recognized specialty hospitals and health care facilities. 14 Other factors, such as population demographics or government policies, may explain the concentration of nursing and residential care facilities. The percentage of Ohioans 65 and older is above the national average, suggesting a higher-than-average need for health care. Ohio s health care policies may also be attractive to some providers; Ohio Medicaid payments are above the national average in many categories U.S. News and World Report, Cleveland Clinic. 15 Kaiser Family Foundation, 2. 15

17 III. Occupational Outlook to 2016 Health care may refer to occupations instead of industries. In 2006, health care industries employed 652,204 workers. Health care occupations, on the other hand, accounted for only about 575,640 workers. This difference in numbers can be explained by the fact that not all workers in health care occupations work in health care industries, nor do health care industries exclusively employ health care occupations. Of course there is a large amount of overlap, but it is not a perfect match. Registered nurses might work in hospitals or elementary schools. Or a nursing care facility might employ both physical therapists and cafeteria cooks. There are 76 occupations that may be considered part of health care. 16 The complete list is given in appendix B at the end of this document, divided by education and training requirements. Across these occupations, there are expected to be 117,250 net new jobs between 2006 and 2016 in Ohio (20.4%). For comparison, total employment during that period is only expected to grow 5.0 percent. 17 Of the 30 occupations in Ohio projected to grow the fastest during this period, 18 are health care occupations. 18 New job growth is not the only source of occupational demand; net replacement needs will be another major source. On average there are expected to be 21,217 health care job openings per year from 2006 to Of these, 44.2 percent will be openings resulting from replacement needs. (Across all occupations, the projected replacement rate is much higher about three-fourths. 19 ) Even in low-growth or declining occupations there will always be a need to replace those who exit the occupation, either through retirement, career changes, or other causes. For example, even though psychiatric technician employment is projected to drop 6.0 percent in the next ten years, there will still be an average 46 openings per year to meet replacement needs. Ohio s aging labor force plays a significant role in occupational replacement needs. In a recent report on aging workers, data from the 2000 Census were used to determine which occupations have a high proportion of individuals in the 44 to 54 age range. There are five health care occupations where more than one quarter of the occupational incumbents were in this age group in These are listed in figure 11 on the next page. 16 For more information on how occupations are classified and defined, see the Technical Notes at the end of this document. 17 ODJFS, 2016 Ohio Job Outlook, C1. 18 Ibid., Ibid.,

20 IV. Education and Training Needs and Infrastructure Of the 692,890 total health care jobs projected for 2016 in Ohio, almost three-fourths will require some sort of postsecondary education. Training requirements in the twelve key health care occupations may be met in one of two ways: degree or certificate attainment at postsecondary institutions, or apprenticeship programs. Only five of these twelve occupations have active apprenticeship programs in Ohio. (One additional occupation is apprenticeable, but there is no active program in the state at this time.) There are 35 apprenticeship programs in Ohio in key health care occupations: 13 programs for nursing aides, orderlies, and attendants; 12 for dental assistants; 6 for medical secretaries; and two each for medical assistants and emergency medical technicians and paramedics. 21 Educational Needs One purpose for designating the key health care occupations earlier is to identify which educational and training programs will have the greatest impact on the health care industry. Cross-referencing key occupations with the training programs needed to prepare for them (see appendix C) and counting how many students completed these programs in the school year, gives an idea of whether the current educational infrastructure is sufficient to meet market demand. 22 A comparison of training program completers with projected average annual openings, along with the number of available apprenticeship programs (an alternative source of job training) is shown in figure 14 on the next page. Please bear a few caveats in mind when reading this table: First, training output includes all degree types, from postsecondary certificates to doctoral diplomas. However, people who earn degrees above the bachelor s level tend to be more geographically mobile and cannot be cleanly assigned to a regional labor market. Second, this table recognizes that, of those who complete training programs, about 15 percent never enter the labor market. 23 (That is, they do not look for work; this does not include those who look but cannot find employment.) This can happen for any number of reasons, such as failure to pass licensing exams, health problems, or family obligations. And third, training output for registered nurses only includes the basic training program and not the other programs listed in appendix C. Most of the other programs are intended primarily for continuing education and career enhancement for current nurses, and are not meant for entry-level nursing students. 21 DOL, Program Sponsors Database. 22 For more information on how educational programs are classified and defined, see the Technical Notes at the end of this document. 23 Ohio Board of Regents,

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